Everton and Nottingham Forest are being informed of a FFP rule breach with a fine or even points deductions expected for both clubs.
The Athletic report that the two sides are due to be charged on Monday (15th January 2024) with breaching profit and sustainability rules (PSR) for a three year cycle to June 2023. Both have prepared mitigation and are expected to launch robust defences.
Club are being informed on whether they have fallen foul of the league’s financial rules under new guidelines which were brought in to make sure any basic breaches are dealt with in time for punishments to be levied in the same season as a charge is brought to attention.
Under the Premier League’s breaching profit and sustainability rules, clubs are allowed to lose a maximum of £105million ($134m) or £35million per season over a rolling three-year reporting cycle.
Everton, who are already appealing against a 10-point deduction relating to the 2021-22 season, could find themselves punished further for exceeding the Premier League threshold.
They recorded a financial loss of £44.7million for the 2021-22 season, which brings their three-year total to £124.5million, with the threshold permitting a maximum loss of £105million over three years, by £19.5m, overspending between 2021-2024.
And Nottingham Forest also face a charge as well as being at risk of a fine or a points deduction, for reporting an annual loss of £45.6million in their last accounts.
They spent a huge amount on transfers after they won promotion to the Premier League, and in a bid to avoid relegation, with Forest using the summer sale of Brennan Johnson (£47.5million) as part of their defence after they previously knocked back a bid of £30million that summer from Brentford.
If Forest had sold Johnson to Brentford in June with that offer, the money would’ve reduced their overall losses between 2020 and 2023 – which is the period they are believed to have breached FFP rules.
The club argue that the better decision would be to accept nearly £50m for Johnson in August, with a spokesman for Forest saying: “Promotion to the Premier League will always create challenges.
“The club approaches all such challenges with its long-term financial sustainability firmly in mind, as the Premier League rules intended.”
Both Everton and Nottingham Forest are preparing mitigation and are due to robustly defend themselves.
Club Statement. pic.twitter.com/iFgMCpsR5G
— Everton (@Everton) January 15, 2024
EVERTON STATEMENT:
Everton Football Club acknowledges the Premier League’s decision to refer a breach of Profit & Sustainability rules (PSR) for the assessment period ending with the 2022/23 season to an independent Premier League commission.
This relates to a period which covers seasons 2019/20, 2020/21, 2021/22 and 2022/23. It therefore includes financial periods (2019/20, 2020/21 and 2021/22) for which the Club has already received a 10-point sanction. The Club is currently appealing that sanction.
The Premier League does not have guidelines which prevent a club being sanctioned for alleged breaches in financial periods which have already been subject to punishment, unlike other governing bodies, including the EFL. As a result – and because of the Premier League’s new commitment to deal with such matters “in-season” – the Club is in a position where it has had no option but to submit a PSR calculation which remains subject to change, pending the outcome of the appeal.
The Club must now defend another Premier League complaint which includes the very same financial periods for which it has already been sanctioned, before that appeal has even been heard. The Club takes the view that this results from a clear deficiency in the Premier League’s rules.
Everton can assure its fans that it will continue to defend its position during the ongoing appeal and, should it be required to do so, at any future commission – and that the impact on supporters will be reflected as part of that process.
NOTTINGHAM FOREST STATEMENT:
Nottingham Forest acknowledges the statement from the Premier League confirming that the club has today been charged with a breach of the league’s Profitability and Sustainability Rules.
The club intends to continue to cooperate fully with the Premier League on this matter and are confident of a speedy and fair resolution.
Everton will argue be based on the expenditure around the Bramley-Moore Dock stadium project.
Premier League clubs had to submit their accounts for 2022-23 by the 31st of December with any breaches and subsequent charges confirmed 14 days later.
An independent commission hearing will take place with clubs set for punishment able to appeal the decision.
Forest currently sit 15th in the Premier League standings, four points clear of the relegation places while Everton are in 17th, a point above 18th-placed Luton Town having played a game more.
PREMIER LEAGUE STATEMENT:
The two clubs have each confirmed to the Premier League that they are in breach of the League’s Profitability and Sustainability Rules
Everton FC and Nottingham Forest FC have each confirmed to the Premier League that they are in breach of the League’s Profitability and Sustainability Rules (PSR). This is as a result of sustaining losses above the permitted thresholds for the assessment period ending Season 2022/23.
In accordance with Premier League Rules, both cases have now been referred to the chair of the Judicial Panel, who will appoint separate Commissions to determine the appropriate sanction.
Commissions are independent of the Premier League and member clubs. The proceedings are heard in private with the Commissions’ final decisions made public on the Premier League’s website. The League will make no further comment until that time.
Notes
Profitability and Sustainability Rules (see Premier League Handbook Section E)
– All Premier League Clubs are assessed for their compliance with the Profitability and Sustainability Rules each year
– Compliance is assessed by reference to the Club’s PSR Calculation, which is the aggregate of its Adjusted Earnings Before Tax for the relevant assessment period
– A Club’s Adjusted Earnings Before Tax figure for each season takes account of its profit or loss after depreciation and interest, but before tax, and then applies a series of ‘add backs’.
– These ‘add backs’ are costs that the Premier League and its Clubs recognise to be in the general interest of the club and football. e.g. investment in infrastructure, community, women’s football, youth development and depreciation of tangible fixed assets. Exceptionally, in relation to years 2019/20, 2020/21 and 2021/22 COVID-19 costs were also permitted to be included as ‘add backs’
– Ordinarily, a Club’s PSR Calculation is the aggregate of its Adjusted Earnings Before Tax over a three-year period. Following amendments made to the PSRs during COVID-19, the relevant figures for Seasons 2019/20 and 2020/21 are now averaged. In the present case, therefore, the relevant period included Season 2022/2023, 2021/2022, and the average Adjusted Earnings Before Tax for Seasons 2020/2021 and 2019/20
– A Club will be in breach of the PSRs if its PSR Calculation over the relevant period results in a loss in excess of £105 million (with that threshold reduced by £22million for each season that the relevant Club has been in the Championship during the relevant period)
– Due to Nottingham Forest spending two seasons in the Championship within the three-year assessment period, the maximum loss for the club is £61million
– At the 2023 Annual General Meeting, Clubs agreed to bring forward the date for the submission of audited Annual Accounts for Clubs forecasting a loss to 31 December (in accordance to Rule E.50.2)
– Both cases will proceed in accordance with the new Standard Directions, set out at Appendix 1 to the Rules
– Clubs also agreed to introduce Standard Directions for PSR cases (Appendix 1 to the Rules) that seek to ensure such cases are resolved in the season in which the complaint is issued, with any sanction handed down prior to the subsequent Annual General Meeting. This provides certainty for the League, its Member Clubs and other stakeholders as to the membership of the League in the subsequent Season (Appendix 1 page 533)
Premier League investigations and independent Commissions
– The Premier League Board have the power to investigate any suspected or alleged breach of Premier League Rules
– Where, following the conclusion of an investigation, an admission by a Club or otherwise, the Board believes that there is a suspicion or allegation of a Rule breach, it has a number of options available to it. One of these options is to issue a written compliant and refer the matter to a Commission
– The League has access to an independent Judicial Panel, comprising a number of legal, financial and other experts. Members of the Judicial Panel are appointed, in accordance with Premier League Rules W.19, W.20 and W.26, by its independent Chair, Murray Rosen KC, an experienced barrister. It is the Chair who selects members of the Judicial Panel to sit on Commissions, which are independent of the Premier League
– All proceedings are confidential and heard in private
– There are a range of sanctions available to the Commission which include fines, points deductions and other sporting sanctions
– Under Premier League Rule W.82.2, at the conclusion of proceedings, a Commission’s final decision will be published on the Premier League website
– For further information on the disciplinary process, please see Section W of the Premier League Handbook
This is how fans reacted with Everton and Nottingham Forest informed of a FFP rule breach with points deductions expected…
@FulhamTransfer: Does this mean everyone else has passed? Now we know our finances are ok can we please bring a couple of players in now 😂
@S_Davisonn: Forest I find especially ridiculous. Out of Prem for almost three decades without the revenues and assets to comply with FFP/PSR and incentivised to heavily invest to survive given the financial power of being in the Prem. Promoted teams should receive concessions imo. #NFFC
@jtweets92: Inexcusable to put ourselves in this position. Incompetence or arrogance take your pick.
@rogerefc: Genuinely if we are in breach again when we’ve sold players, reduced the wage bill and size of the squad drastically then what’s the fucking point even trying to compete in this rotten league? It’s pretty clear the @premierleague are only interested in a handful of clubs.
@SimpsonsNffc: So much to be frustrated about with this. Spent a fortune on players that have done absolutely nothing for us and it has ended up putting us in breach of the P&S rules. Richards, Dennis, Shelvey, Bowler, O’Brien, Omobamidele, Origi, Scarpa and two dreadful keepers to name a few. Grateful to the ownership for stumping up the cash, but they’d only have had to spend half as much if recruitment wasn’t such a shambles. Don’t bother going on about the Premier League being corrupt. We knew the rules and we’ve broken them. There was no need to even be in the position where we need to prepare a “robust defence” to avoid a sanction.
@stuafc71: Yes we’ve heard “investigations” are in the works for Man City. But you’re telling me we heard of sanctions against Everton within weeks. Now throw forest into the mix. Yet we still have no idea when the findings of Man City breaches will come out. Whether it’s months/years
@SouthBankMatt: Who would have thought that buying 59 players, on big contracts, in a single transfer window was unsustainable?
@Mick_Birchall: What chance have the other relegation fighting teams got when teams around them are cheating their way to safety? And weirdly the cheats are the ones acting hard done to 😂
@louorns: Luton might be the luckiest team of all time. Promoted in the worst championship of all time and going to stay up this season because three other teams will have points deductions
@AdamClery: Crazy how quickly the Premier League can enforce these rules when there’s the threat of an independent regulator looming. Almost as if it’s nothing to do with sustainability at all…
@WiggumCharm: Marinakis should just tell the Premier League we got our accounting software from Horizon. Haven’t overspent at all, we just got stitched up like all the lads down the Post Office… #NFFC
@JordanHooley3: Can I ever have just a normal season as a Forest fan? Like why cant we just finish mid table with no drama, no relegation fight, no bottling promotion. I’m not asking for Europe so please just allow it #NFFC
@JoshuaHirst13: 30 point deduction for both would be lovely, saying this from a completely unbiased point of view
@nufcpb: 😭😭😭😭😭 if these 2 have cheated it’s only right we get our 6 points back #ROBBED #CHEATERS
@nffckez: Remember the level of hostility after Everton’s last point deduction and how they scrapped for everything. Yeah, we’re gonna need some of that. #nffc
@trickytrees12: Questions need to be asked if we are charged tomorrow. We knew the rules & to fall foul of it through mismanagement & lack of any proper recruitment strategy is poor. Ambition & money is great but we need a solid football & recruitment strategies & to stick to them. #nffc
@LutonTownExile: IF Everton and Forest both got 10 point deductions tomorrow we would be 6 points ahead of Forest (same games) and 9 points ahead of Everton (with us having a game in hand). Means nothing but it feels like the football gods might actually be shining on us for the first time ever.
@WWFCJL: If there’s further points deductions for Everton and a deduction for forest I can see Luton staying up
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